Justia Tax Law Opinion Summaries

Appellants challenged the amendments to the state earnings tax statutes, Mo. Rev. Stat. 92.105 through 92.125, raising several arguments. The trial court dismissed Appellants' second amended petition with prejudice. The Supreme Court affirmed, holding (1) the amendments did not violate Mo. Const. art. III, 51, as the initiative was not used for a de facto appropriation of money to pay the election costs to continue the earnings tax; (2) the requirement to hold recurring elections without providing state funds did not constitute an unfunded mandate in violation of the Hancock Amendment; and (3) Appellants did not state a claim for violation of an amendment to the city charter of Kansas City because the initiative process did not amend Kansas City's charter, and therefore, the constitutional requirements of Mo. Const. art. VI, 20 regarding amendments to a city's charter were not applicable. View "Dujakovich v. Carnahan" on Justia Law

Casey's Marketing Company was a convenience store engaged in the retail sale of gas, grocery items, nonfood items, and prepared foods. Aquila Foreign Qualifications Corporation was a utility that sold electricity to Casey's. Casey's filed a refund claim with the director of revenue for one month's tax paid for a portion of electricity Aquila sold to two Casey's locations. The director denied the claim. At Casey's request, Aquila challenged the director's final decision. The administrative hearing commission reversed, holding that Mo. Rev. Stat. 144.054.2, which provides a tax exemption for the "processing" of products," exempted Casey's food preparation operations. The Supreme Court reversed the commission, holding (1) the preparation of food for retail consumption is not "processing" within the meaning of section 144.054.2; and (2) therefore, Casey was not entitled to a sales and use tax exemption on electricity it purchased to power its food preparation operations. View "Aquila Foreign Qualifications Corp. v. Dir. of Revenue" on Justia Law

Craig Street requested a refund of the local sales taxes the Missouri Director of Revenue required him to pay to license the boat, outboard motor, and trailer he purchased from a dealer in Maryland. The Administrative Hearing Commission (AHC) denied Street's request. Street appealed, claiming that the AHC erred because its interpretation of Mo. Rev. Stat. 144.069 and 32.087.12(2) to permit the County's assessment and collection of local sales tax on his out-of-state purchase was clearly contrary to the reasonable expectations of the General Assembly in enacting the local sales tax statutes. The Supreme Court reversed, holding that because the plain and ordinary meaning of the Sales Tax Law, Mo. Rev. Stat. 144.010 to 144.525, authorizes a county to impose sales taxes only on sales occurring within Missouri, the decision of the AHC upholding the Director's collection of a local sales tax on Street's out-of-state purchases was unauthorized by law. Remanded. View "Street v. Dir. of Revenue" on Justia Law

The city of Winchester and its collector (Winchester) filed a class action lawsuit against Charter Communications on behalf of itself and other similarly situated Missouri municipal corporations and political subdivisions, seeking a declaratory judgment requiring Charter and other telephone service providers to comply with ordinances requiring them to pay a license tax on gross receipts derived from fees and services connected to their operations and an order requiring Charter to pay all license taxes owed to the class. The circuit court struck Winchester's claims on the basis of Mo. Rev. Stat. 71.675, which bars cities and towns from serving as class representatives in suits to enforce or collect business license taxes imposed on telecommunications companies. The Supreme Court quashed the court's preliminary writ of prohibition and granted Winchester's request for a permanent writ of mandamus directing the trial court to vacate its order, holding that the court exceeded its authority in striking Winchester's class action allegations pursuant to section 71.675, as the statute violated Mo. Const. art. V, 5 because it amended a procedural rule of the Court.

Custom Hardware Engineering (CHE) appealed an Administrative Hearing Commission (AHC) decision determining that CHE was liable for use tax plus interest and additions to tax on its purchases of parts for use in fulfilling maintenance contracts. CHE asserted that is was not liable for any use tax because it did not use the parts and, instead, retained them for "temporary storage" as provided in Mo. Rev. Stat. 144.605(13). The Supreme Court affirmed the AHC decision, holding (1) the record demonstrated that CHE used the parts for testing and certification on behalf of its customers; and (2) therefore, CHE was liable for use tax as provided in Mo. Rev. Stat. 144.610.

Missouri law provides for two sales tax rates: a standard rate of four percent that applies to most retail sales, and a reduced rate of one percent that applies to some, but not all, sales of food. Krispy Kreme sought review of a decision of the Administrative Hearing Commission (AHC) that Krispy Kreme must collect tax at the four percent rate on all retail food sales at its Missouri locations. At issue on appeal was whether Krispy Kreme's product fell under the definition of "food" in Mo. Rev. Stat. 144.014.1, which establishes the lower sales tax rate for purchases of food. The Supreme Court reversed in part and affirmed in part, holding (1) the phrase "food prepared by such establishment for immediate consumption on and off the premises" in section 144.014.1 means all food that is eaten at the place of preparation and purchase, or while traveling to, or immediately upon arrival at another location without any further preparation; (2) affirmed the AHC's decision to overrule Krispy Kreme's motion for summary decision because neither party was entitled to summary decision; and (3) reversed the portion of the AHC's decision sustaining the director's motion. Remanded.

Wehrenberg, Inc. operated a restaurant-style concession offering hotdogs, pizza, and similar items at four of its movie theaters. Wehrenberg charged its customers the four percent state sales tax imposed by Mo. Rev. Stat. 144.202. Wehrenberg then filed a sales tax refund claim with the Director of Revenue, asserting that the concession items should have been taxed at the one percent rate set forth in Mo. Rev. Stat. 144.014. The Director and the AHC denied the claim. The Supreme Court affirmed, holding that because the food for sale at Wehrenberg's concession stands was not intended for home consumption, the one percent state sales tax rate set forth in section 144.014 did not apply to Wehrenberg's food sales.

Two taxpayers filed a petition for declaratory judgment challenging the constitutional validity of Mo. Rev. Stat. 99.1205, the Distressed Areas Land Assemblage Tax Credit Act. The taxpayers claimed that the tax credits provided by the Act constituted an unconstitutional grant or lending of public money to private persons, associations, or corporations. The trial court declined to enter declaratory judgment, concluding that the taxpayers did not have standing to challenge the statute. On appeal, the taxpayers argued they had standing because the tax credits were direct expenditures of funds generated through taxation and that the tax credits given under the Act were unconstitutional. The Supreme Court affirmed, concluding (1) the taxpayers did not meet their burden to prove they had standing to bring a challenge to the statute as the issuance of tax credits does not constitute a direct expenditure of funds generated through taxation, and (2) in accordance with Arizona Christian School Tuition Organization v. Winn, tax credits are not government expenditures and any effect on taxpayers in general is "merely speculative."

St. Louis County enacted an ordinance that established a new trash collection program in the county. Specifically, the ordinance authorized the county to establish trash collection areas in the county and allowed the county executive to advertise for bids or proposals to provide services for trash collection in the designated areas and award contracts to selected trash haulers. The County subsequently enacted an ordinance prohibiting trash haulers that were not selected in the bidding process from providing trash collection services within the eight designated collection areas. Taxpayers living in the waste collection areas then filed a class action petition, alleging (1) the County violated its charter and Mo. Rev. Stat. 260.247, violations that deemed the trash collection program void, and (2) the respondents violated the Missouri Merchandising Practices Act (MPA). The trial court granted the respondents' motion to dismiss for failure to state a claim. On appeal, the Supreme Court affirmed, holding (1) the County did not violate its charter, (2) the taxpayers did not have standing to file a claim under Section 260.247, and (3) the taxypayers' claim under the MPA was derivative of their claims that the trash collection program was void, so that claim also failed.

Appellants, St. Louis County and St. Louis Convention and Visitors Commission (CVC), filed suit against Prestige Travel and numerous other online travel companies that facilitate the booking of hotel and motel rooms via the internet. The appellants argued that Prestige and the other companies were required to pay hotel and tourism taxes imposed by the revised ordinances of St. Louis County and state law. Prestige moved to dismiss the petition, and the circuit court overruled the motion. Shortly thereafter, H.B. 1442, which specifically exempted online travel companies such as Prestige from the tax, was passed. Prestige filed a motion to reconsider its motion to dismiss, and the circuit court dismissed the case. Appellants appealed, arguing the law violated the state constitution. The Supreme Court affirmed, holding (1) appellants waived their constitutional challenge to the law by failing to raise it at the earliest opportunity; (2) the law does not violate the original purpose requirement of the state constitution; and (3) the argument that the title of the law is so general that the bill should be invalidated in its entirety is not supported by the current state of law.